Correlation Between Visa and BridgeBio Pharma
Can any of the company-specific risk be diversified away by investing in both Visa and BridgeBio Pharma at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Visa and BridgeBio Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and BridgeBio Pharma, you can compare the effects of market volatilities on Visa and BridgeBio Pharma and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Visa with a short position of BridgeBio Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and BridgeBio Pharma.
Diversification Opportunities for Visa and BridgeBio Pharma
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and BridgeBio is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BridgeBio Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BridgeBio Pharma and Visa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Visa Class A are associated (or correlated) with BridgeBio Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BridgeBio Pharma has no effect on the direction of Visa i.e., Visa and BridgeBio Pharma go up and down completely randomly.
Pair Corralation between Visa and BridgeBio Pharma
Taking into account the 90-day investment horizon Visa is expected to generate 1.94 times less return on investment than BridgeBio Pharma. But when comparing it to its historical volatility, Visa Class A is 4.13 times less risky than BridgeBio Pharma. It trades about 0.35 of its potential returns per unit of risk. BridgeBio Pharma is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,341 in BridgeBio Pharma on September 1, 2024 and sell it today you would earn a total of 368.00 from holding BridgeBio Pharma or generate 15.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. BridgeBio Pharma
Performance |
| Timeline |
| Visa Class A |
| BridgeBio Pharma |
Visa and BridgeBio Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and BridgeBio Pharma
The main advantage of trading using opposite Visa and BridgeBio Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, BridgeBio Pharma can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BridgeBio Pharma will offset losses from the drop in BridgeBio Pharma's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| BridgeBio Pharma vs. Tff Pharmaceuticals | BridgeBio Pharma vs. Eliem Therapeutics | BridgeBio Pharma vs. Inhibrx | BridgeBio Pharma vs. Enliven Therapeutics |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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